- The Indian government has mandated that all private companies, excluding small companies, must dematerialize their shares by September 30, 2024.
- This move is aimed at increasing transparency and oversight in the financial system and reducing fraudulent activities related to physical shares.
- Private companies not classified as small companies as of the last day of a financial year ending on or after March 31, 2023, must comply with the dematerialization rule within 18 months from the close of that financial year.
- The dematerialization of shares will enhance investor security, enable instant transfer and crediting of new shares, reduce companies’ expenses in printing and distributing physical certificates, and assist regulators in curbing illicit activities.
- The Indian depository services industry, including entities like Central Depository Services (CDSL) and National Securities Depository (NSDL), is expected to benefit from this mandatory dematerialization, further promoting transparency and formality in the economy.